REASONS
FOR JUDGMENT
D'Arcy J.
[1]
The Appellant has filed three notices of appeal
in respect of reassessments issued by the Minister. All three appeals relate to
the same issue: whether the supply by the Province of Ontario to the Appellant
of police services provided by the Ontario Provincial Police (the “OPP”) constitutes an
exempt supply under section 21 of Part VI of Schedule V of Part IX of the Excise
Tax Act (Part IX of the Excise Tax Act will be referred to as the “GST Act”).
[2]
The three appeals were heard together on common
evidence.
[3]
The parties filed a statement of partial agreed
facts and documents (the “PASF”). A copy of the PASF is attached as Appendix A to my
reasons for judgment.
[4]
I also heard from three witnesses. The Appellant
called Mr. Craig White and Staff Sergeant Chuck Kaizer. The Respondent called
Inspector Burt McDonald. I found all three witnesses to be credible.
[5]
Mr. White is an employee of the Appellant.
Between October 2007 and his promotion in 2010 he was the director of highway
operations. In this role he had operational responsibility for the toll highway
known as Highway 407 (the “407 ETR”). In 2010 he was promoted to vice-president of
highway and tolling operations. He is now responsible for the operation of the
highway.
[6]
Staff Sergeant Kaizer is the commander of the Highway
407 Detachment of the OPP. This is the detachment of the OPP that polices the
407 ETR.
[7]
Inspector McDonald is the manager of the
Municipal Policing Bureau of the Ontario Provincial Police.
I. Summary
of Facts
[8]
I will now summarize the facts as set out in the
PASF, incorporating the testimony of the three witnesses.
[9]
The 407 ETR is an “all-electronic
open-access highway” located north and west of
Toronto, Ontario. It is a toll highway. Mr. White testified that the highway
starts at Brock Road in the Regional Municipality of Durham, in Ontario (the “Durham region”). It runs
through the Regional Municipality of York (the “York
region”) and the Regional Municipality of Peel
(the “Peel region”)
into the Regional Municipality of Halton (the “Halton
region”), and ends in Burlington, Ontario where
it meets the QEW highway.
Staff Sergeant Kaizer testified that approximately 380,000 vehicles use the 407
ETR on a daily basis.
[10]
The 407 ETR is not under the jurisdiction or
control of any municipality and is not part of the road system of any municipality. Further, no municipality or
local authority may interfere with the 407 ETR or construct or change the use
of any private road, entranceway, gate or other structure or facility as a
means of access to the 407 ETR.
[11]
The original portion of the 407 ETR was built
and operated by the Province of Ontario through a crown agency, the Ontario
Transportation Capital Corporation (the “OTCC”). Construction began in 1994 and the highway opened,
as a toll highway, on June 7, 1997.
[12]
On April 6, 1999, the OTCC was continued as a corporation
with share capital under the name 407 ETR Concession Company Ltd. (i.e., the
Appellant). On that day, the Appellant entered into a Concession and Ground
Lease Agreement (the “Ground Lease”), a 99-year concession agreement, with the Province
of Ontario.
Paragraph 2.1 of the Ground Lease summarizes the effect of the concession as
follows:
. . . the Grantor
[Province of Ontario] grants to the Concessionaire [the Appellant] the
exclusive concession to develop, design and build the Highway 407 Central
Deferred Interchanges, Highway 407 West and Highway 407 East Partial and to
finance, operate, manage, maintain, rehabilitate and toll the Project [the 407
ETR] in accordance with the provisions of this Agreement.
[13]
Basically, the Appellant was given the right to
complete construction of the highway and operate the toll highway subject to
the terms of the Ground Lease. However, the Province of Ontario retained the
fee simple title to the highway lands.
The operation of the 407 ETR is also subject to the Highway 407 Act,
1998, (the “Highway 407 Act”).
[14]
On May 5, 1999, 407 International Inc., a
consortium of non-public corporations, acquired the shares of the Appellant
from the Province of Ontario.
As a result, a private corporation took over the operation of the 407 ETR.
[15]
Mr. White described the operation of the 407 ETR
as a classic public-private partnership. He noted that the Appellant and the
Ontario Government have been recognized through joint awards in respect of the
partnership.
[16]
During its construction phase, the 407 ETR was
policed by the relevant regional municipal police force. For example, the
portion of the highway in York was policed by the York Regional Police Force
and the portion in Peel was policed by the Peel Regional Police Force.
[17]
When the highway opened in 1997, it was part of
the King’s Highway.
Pursuant to subsection 19(1) of the Police Services Act, R.S.O. 1990,
c.p. 15 (the “Police Services Act”), the OPP is responsible for maintaining a traffic
patrol on the King’s Highway. As a result, from the time it opened until the
time the shares of the Appellant were sold to private investors, the OPP
policed the 407 ETR on behalf of the Province of Ontario.
[18]
Mr. White testified that there are three
components of the lands leased from the Province of Ontario under the Ground
Lease. The main component is the highway itself, the 407 ETR. The PASF states
that the 407 ETR is “a fenced-in corridor with
fencing which restricts access to the highway.”
In other words, the fence defines the area of the highway.
[19]
The other two components of the leased land are
the operation centre land and the patrol yard lands. Mr. White discussed each
of these components. The operations centre land is located on Steeles Avenue in
the York region. It contains the main building of the Appellant, including its
operations centre. It is policed by the York Regional Police Force. The
Appellant does not pay a fee for this service; however it does pay realty tax
on the operations centre land.
[20]
There are two patrol yards; one is in the York
region and the other is in the Halton region. The patrol yards contain storage
facilities for salt, patrol trucks and equipment. They are policed by the
respective regional police forces. As with the operations centre land, the Appellant
does not pay a fee for this service, but does pay realty tax on the lands.
[21]
Mr. White referred to two other types of land
that are either adjacent to or intersect with the 407 ETR. The first is the
so-called “corridor lands”. The PASF describes the corridor lands as “lands and rights that are (i) adjacent to, over or
under the Highway 407 Lands [the 407 ETR], (ii) owned by the Province and (iii)
not leased to 407 ETR Concession Company Limited [the Appellant].” The Province of Ontario retains the fee simple title
to these lands.
[22]
Mr. White described the corridor lands as lands
that are outside the 407 ETR’s fenceline. He noted that the corridor lands are
policed by the regional police force responsible for the particular area. For
example, the corridor lands in the Halton region are policed by the Halton Regional
Police.
[23]
The other lands that are adjacent to the 407 ETR
are the municipal roads that cross over the 407 ETR. Although these roads cross
over the 407 ETR lands, they are under the authority and jurisdiction of the
municipal (or regional) authority and are policed by the relevant regional
police force.
[24]
The 407 ETR is policed by the OPP. This is the
result of the Highway 407 Act, the Police Services Act and the
Ground Lease.
[25]
Subsection 12(2) of the Highway 407 Act
states that, despite any designation under section 36 of the Public
Transportation and Highway Improvement Act, Highway 407 is not part of the
King’s Highway. However, subsection 59(2) of the Highway 407 Act
provides that, for the purposes of paragraph 3 of subsection 19(1) of the Police
Services Act, Highway 407 shall be deemed to be part of the King’s Highway.
As I noted previously, paragraph 3 of subsection 19(1) of the Police Services
Act provides that the OPP is responsible for maintaining a traffic patrol
on the King’s Highway.
[26]
Paragraph 59(3) of the Highway 407 Act
states that the OPP may, with the approval of the Solicitor General, charge the
Appellant the reasonable costs of providing services under paragraph 3 of
subsection 19(1) of the Police Services Act on a full cost recovery
basis. Paragraph 59(4) of the Highway 407 Act provides that the
Solicitor General may enter into an agreement with the Appellant for the
provision of such services.
[27]
Section 14.1 of the Ground Lease provides that
the Appellant shall permit the OPP to maintain traffic patrol and provide other
services which the OPP is required to perform pursuant to “Laws and
Regulations” in respect of the 407 ETR. “Laws
and Regulations” is defined in section 1.1 of
the Ground Lease to mean “any requirements under
or prescribed by the common law and any federal, provincial or municipal laws,
court orders or judgments, orders-in-council, by-laws, codes, orders, rules,
policies, regulations or statutes affecting, applicable to or otherwise
relating to, the Concessionaire [the Appellant], the Project [which includes
the 407 ETR] or the use thereof, including Environmental Laws.”
[28]
Section 14.1 of the Ground Lease also provides
that the Appellant shall perform and observe its covenants and obligations
under the “Police Services Agreement”.
[29]
Exhibit A/R 7 contains a copy of the “Police Services Agreement”
between the Province of Ontario and the Appellant (the “Police
Services Agreement”). Mr. White testified
that this version was in force from October 1, 2005 to September 30, 2010. It
was then extended to December 31, 2011.
[30]
The actual police services provided are set out
in Schedule A to the Police Services Agreement. One of the recitals to
Schedule A to the agreement states the following:
Highway 407 ETR
requires policing that is both pro-active (preventative patrols, speed and
seatbelt enforcement programs, toll evasion enforcement, etc) and reactive
(collision investigation, stranded motorists, etc), twenty four (24) hours a
day, seven (7) days a week. The services that are provided as part of this
contract include all policing services related to Highway 407 ETR, including
specialized services.
[Emphasis added.]
[31]
Section 3.1 of the Police Services Agreement
provides that the police services provided by the OPP shall be provided in the
same manner and to the same extent as provided by the OPP on comparable
controlled access highways in the GTA and in accordance with the Laws and
Regulations.
[32]
Section 3.3 provides that the OPP shall be solely
responsible for all operational policing decisions.
[33]
Staff Sergeant Kaizer testified that the
services that the OPP provides on the 407 ETR are not limited to “traffic patrol” or enforcement
of the provisions of the Highway Traffic Act. He acknowledged that the
OPP provides the same services on the 407 ETR that municipal police forces are
required to provide under subsection 4(2) of the Police Services Act,
namely, crime prevention, law enforcement, assistance to victims of crime, maintenance
of public order and emergency response.
[34]
His testimony was consistent with the OPP
business plans. For example, the 2008 plan notes that the OPP’S Highway 407
Detachment provides full policing services on Highway 407. It also notes that
the Highway 407 Detachment of the OPP provides effective and efficient policing
services that address local needs while fulfilling its provincial mandate for
policing.
[35]
In short, the OPP provides all policing services
required to enforce the law. This is acknowledged by the parties at paragraph
28 of the PASF, which states: “. . . The
policing service on Highway 407 is provided by the Highway 407 Detachment of
the OPP which provides full policing service on Highway 407 to ensure that
public and contractual needs are met.”
[36]
Pursuant to the terms of the Police Services
Agreement, the Appellant pays the Province of Ontario for the OPP’s policing
services. Section 2.3 of the Police Services Agreement states that Ontario
shall charge for the reasonable costs of providing services under the Agreement
on a full cost recovery basis.
[37]
Mr. White testified that the OPP uses the same
cost structure to determine the amount it bills the Appellant as it uses to
determine the amount it bills a municipality for policing services it provides
to the municipality. This is evidenced by Schedule B to the Police Services
Agreement entitled “O.P.P. Cost Schedule For
Municipal Policing for the Year 2005”.
[38]
When asked why the OPP uses the OPP cost
schedule for municipal policing to determine the amount it bills the Appellant,
Inspector McDonald stated: “It’s a common
schedule we use for front-line policing services.”
[39]
The Province of Ontario invoices the Appellant
on a monthly basis for the OPP’s services. Prior to June 30, 2010, the Province
did not charge GST on its invoices. However, beginning with its July 21, 2010
invoice, the Province charged the tax.
[40]
For the relevant periods prior to July 1, 2010,
the Minister assessed the Appellant for GST it claimed the Appellant should
have paid in respect of amounts invoiced by the Province.
[41]
The Appellant claimed a rebate for tax paid in
error in respect of the tax it paid to the Province after July 1, 2010.
[42]
The Minister denied the Appellant’s rebate claim
and confirmed the original assessments. It appears the amount of tax at issue
is $1,277,586.
II. The
Relevant Provisions of the GST Act
[43]
This appeal is concerned with the GST levied
under subsections 165(1) and (2) of Division II of the GST Act.
[44]
Those subsections read as follows:
165 (1) Subject
to this Part, every recipient of a taxable supply made in Canada shall pay to
Her Majesty in right of Canada tax in respect of the supply calculated at the
rate of 5% on the value of the consideration for the supply.
165 (2) Subject
to this Part, every recipient of a taxable supply made in a participating
province shall pay to Her Majesty in right of Canada, in addition to the tax
imposed by subsection (1), tax in respect of the supply calculated at the tax
rate for that province on the value of the consideration for the supply.
[45]
The 5% rate imposed under subsection 165(1) was
7% prior to July 2006 and 6% from July 2006 to the end of 2007.
[46]
The effect of subsections 165 (1) and (2) is to
levy a single federal value-added tax at two rates: the 5% rate for supplies
made in so-called non-participating provinces
and a 13%, 14% or 15% rate for supplies made in participating provinces. The
tax is referred to as the GST when levied with respect to a supply made in a
non-participating province and the HST when levied in a participating province.
I will refer to the tax as the GST.
[47]
The supply in question was made in the Province
of Ontario. The Province of Ontario elected to become a participating province
effective July 1, 2010.
As a result, the rate at which the federal value-added tax was levied in Ontario
under the GST Act increased on July 1, 2010 from 6% to 14%.
[48]
As I noted previously, the Province of Ontario
began charging GST on invoices it issued after July 1, 2010 for the OPP’s
police services. In a letter dated July 7, 2010, an official from the OPP
explained the reason for the change as follows:
The Province of
Ontario’s new 13% Harmonized Sales Tax (HST) came into effect July 1st,
2010. We have recently been advised by The Business and Financial Planning
Branch (BFPB) of the Ministry of Community Safety and Correctional Services
that the 407 OPP policing services are subject to the new tax. This tax status
was determined in consultation with senior government tax experts of the
Ministry of Revenue.
[49]
Counsel for the Respondent was not sure which
Ministry of Revenue is being referred to in the letter. However, he noted that
it was not the agency that administers the tax, that is the Canada Revenue
Agency. It appears clear to me that the letter is referring to the Ontario
Ministry of Revenue.
[50]
It is important to note that a new tax was not
imposed on July 1, 2010. Rather, the rate at which the GST was imposed under
the GST Act in respect of taxable supplies made in Ontario was increased
from 6% to 14%. The GST has been in existence since 1991. Further, the section
at issue, section 21 of Part VI of Schedule V of Part IX of the GST Act,
was not amended on July 1, 2010. The last time the section was amended was
2003. That amendment was made retroactive to the introduction of the GST.
[51]
The supply of the OPP’s police services will be
subject to GST if the supply is a taxable supply.
[52]
A taxable supply is defined as a supply made in
the course of a commercial activity.
Commercial activity is defined, in part, as a business carried on by a person except to the extent to which
the business involves the making of exempt supplies by the person.
[53]
It is accepted by both parties that if the
supply of the OPP’s services is not an exempt supply, then the supply is a
taxable supply.
[54]
Exempt supply is defined to mean a supply
included in Schedule V.
[55]
Part VI of Schedule V (the “Exempting Schedule”)
exempts numerous supplies made by a public sector body, which is defined to
mean either a government or a public service body. Government is defined to
mean the Federal Government and the provincial governments. Public service body
is defined to mean a non-profit organization, a charity, a municipality, a
school authority, a hospital authority, a public college or a university.
[56]
As noted previously, the relevant section for the
purposes of this appeal is section 21 of the Exempting Schedule. Throughout the
relevant period that section read as follows:
21. [Municipal
services] — A supply of a municipal service, if
(a) the supply is
(i) made by a government or municipality to a recipient that is an
owner or occupant of real property situated in a particular geographic area, or
(ii) made on behalf of a government or municipality to a recipient
that is an owner or occupant of real property situated in a particular
geographic area and that is not the government or municipality;
(b) the service is
(i) one which the owner or occupant has no option but to receive, or
(ii) supplied because of a failure by the owner or occupant to
comply with an obligation imposed under a law; and
(c) the service is not one of testing or inspecting any property for
the purpose of verifying or certifying that the property meets particular
standards of quality or is suitable for consumption, use or supply in a
particular manner.
[57]
Section 21 of the Exempting Schedule will apply
to the supply of the OPP’s policing services if the following conditions are
satisfied:
1.
The supply is a supply
of a municipal service;
2.
The supply of the
municipal service is made by a government or municipality;
3.
The supply is made by
the government or municipality to a recipient that is an owner or occupant of
real property situated in a particular geographic area; and
4.
The municipal service
is one which the owner or occupant has no option but to receive.
[58]
The parties agree that the supply of the OPP’s
services was made by a government, the Province of Ontario. They also agree
that the Appellant, the recipient of the supply, is an occupant of real
property situated in a particular geographic area (i.e., the 407 ETR) and that
the Appellant had no option but to receive the OPP’s services.
[59]
The sole issue before the Court is therefore whether
the OPP’s policing services constitute “a
municipal service” for the purposes of section
21 of the Exempting Schedule.
[60]
This issue is important to the Appellant since
the OPP’s policing services were consumed by the Appellant in the course of
making exempt supplies. The supply of a toll highway is exempt under section 2
of Part VIII of Schedule V. As a result, the Appellant is not entitled to claim
an input tax credit for any GST paid in respect of the supply of the OPP’s
policing services.
III. Positions
of the Parties
[61]
The position of the Respondent is that the
supply made by the Appellant is not a supply of “a
municipal service” for the purposes of section 21
of the Exempting Schedule because the supply was a supply of providing traffic
patrol on the King’s Highway, which is not within the mandate of any municipal
authority. The Respondent’s counsel argued that the police services provided by
the OPP are police services that are not a municipal responsibility; they are
exclusively a provincial responsibility and for that reason fall outside of the
opening words, “a municipal service”, in section 21 of the Exempt Schedule.
[62]
The Appellant argues that the term “a municipal service”
as used in section 21 of the Exempt Schedule is to be interpreted more
broadly to include all services that are in the nature of services typically
provided by municipalities.
What is “a
municipal service” for the purposes of section 21 of the Exempting Schedule?
[63]
As has been stated by this Court on numerous
occasions, the general rule for interpreting statutes is the textual,
contextual and purposive approach, as confirmed by the Supreme Court of Canada
in Canada Trustco Mortgage Co v Canada.
[64]
Furthermore, an interpretation of a statute must
be consistent with the presumption against tautology, which requires that, to
the extent possible, a court should avoid adopting an interpretation that
renders any portion of a statute meaningless or redundant.
[65]
In my view, the key to interpreting the phrase “a municipal service”
is the fact that Parliament decided that the supply of the “municipal service” may
be made by either a government or a municipality. For the purposes of a supply
made in Ontario, government is defined as either the Federal Government or the
Province of Ontario.
In short, section 21 contemplates the “municipal
service” being provided by the Province of
Ontario, a municipality or the Federal Government.
[66]
A review of the Exempting Schedule shows that
Parliament distinguished between supplies made by either a government or a
municipality and supplies made only by a municipality. For example, sections 20
and 21 of the Exempting Schedule refer to supplies made by either a government
or a municipality, while sections 21.1 and 22 only refer to supplies made by a
municipality.
[67]
The Respondent is asking me to adopt an
interpretation that would result in section 21 only applying if the supply of a
“municipal service”
is made by a municipality. Counsel referred to services within the “mandate” of the
municipality and services that are a municipal “responsibility”. In my view, if the service is within the mandate of
the municipality or is a municipal responsibility, then that service would only
be supplied by the municipality.
[68]
It is difficult to think of a situation where a
provincial government would supply a service that is the responsibility of a
municipality to a landowner or an occupant of land. It would seem to me that in
such a situation the provincial government would supply the service to the
municipality, which in turn would supply the service to the landowners or
occupant of land. For example, I heard evidence that the OPP supplies policing
services for a fee to a number of municipalities. In fact, such a supply is
specifically exempted under paragraph 20(g) of the Exempting Schedule.
[69]
In short, the interpretation suggested by the
Respondent is not consistent with the presumption against tautology. Section 21
applies, in part, to a supply of a municipal service made by a government, i.e.,
the Federal Government or a province. An interpretation of municipal service
that limits the application of section 21 to supplies made by a municipality
renders the words “made by a government” meaningless.
[70]
The words municipal service must be interpreted
in a way that allows for the service to be supplied by either a government or a
municipality. I agree with the Appellant: interpreting “a
municipal service”, as that phrase is used in
section 21, to mean a service that is in the nature of services typically
provided by municipalities satisfies Parliament’s intention that the service
may be supplied by either a government or a municipality.
[71]
This is so since it is reasonable to assume that
the Federal Government or a province do make supplies of services that are
typically provided by a municipality. As I will discuss shortly, this is the
exact fact situation before me.
[72]
I believe such an interpretation is consistent
with the purpose of section 21. The section is intended to exempt supplies of
services that are made by a government authority (federal, provincial or
municipal) that the owner or occupant of land has no option but to receive and
that would normally be financed by taxes charged by the provider of the
services (i.e., the federal, provincial or municipal government). The section
is intended to cover such services regardless of whether they are provided by a
municipality, the federal government or a province.
[73]
My interpretation is consistent with the Technical
Notes issued by the Federal Department of Finance in June 2003 to explain the
purpose of the amendment to section 21. The Technical Notes state, in part, the
following:
Section 21 of
Part VI of Schedule V to the Excise Tax Act (Public Sector Bodies)
exempts from the GST/HST certain municipal services supplied by or on behalf of
a municipality or government (here referred to as the “municipal
authority”) to property owners or occupants (i.e., municipal residents) in a
particular geographic area. These are services that the owners or occupants
have no option but to receive . . .
. . .
In the vast
majority of cases, municipal authorities [a municipality or government]
raise revenues to fund the provision of the types of municipal services covered
by section 21 through the general property tax or other taxes that do
not constitute consideration. Such services are rarely made by municipal
authorities [a municipality or government] for consideration charged to
their residents who receive the services. Therefore, in most cases, section 21
need not be relied upon to achieve exempt status for the supplies made by
municipal authorities [a municipality or government] of the type of services
covered by the section . . . However, section 21 ensures that, should the
municipal authority [a municipality or government] choose to charge
consideration (e.g., in the form of a specific user fee) to a municipal
resident for a municipal service covered by the provision, that supply remains
part of the exempt activities of the municipal authority [a municipality or
government] and the resident is not required to pay any GST/HST on the
consideration.
[Emphasis added.]
IV. Application
of the Law to the Facts
[74]
In my view, the OPP policing services provided
by the Province of Ontario to the Appellant are in the nature of services
typically provided by municipalities. In fact, policing services are one of the
core services provided by a municipality.
[75]
The 407 ETR is located in various regional
municipalities. As a result, the various regional municipal police forces would
police the 407 ETR if it were not designated a King’s Highway for the purposes
of paragraph 3 of subsection 19(1) of the Police Services Act. This can
be seen from the corridor lands that are adjacent to the 407 ETR and owned by
the Province of Ontario. Since such lands are located in the regional
municipalities and are not part of a King’s Highway, they are policed by the
relevant regional municipal police force. It also can be seen from the fact
that during its construction phase the 407 ETR was policed by the relevant
regional municipal police force.
[76]
Similarly, the Appellant’s operations centre
land and patrol yard lands are policed by the relevant regional municipal
police force. These lands are leased to the Appellant by the Province but,
since they are not physically part of the King’s Highway, they are policed by
the regional municipal police force for the region in which they are situated.
[77]
More importantly, as noted by Staff Sergeant
Kaizer, the policing services provided by the OPP on the 407 ETR are the same
services that municipal police forces provide under subsection 4(2) of the Police
Services Act. His testimony was consistent with the testimony of Inspector
McDonald and the annual business plans of the OPP’s Highway 407 Detachment.
[78]
For these reasons, I have concluded that the
policing services provided by the OPP to the Appellant were of the same nature
as services typically provided by municipalities. As a result, the supply of
the services constituted “a supply of a
municipal service” for the purposes of section
21 of the Exempting Schedule.
[79]
Since the parties agree that the other
conditions of section 21 are satisfied, the supply by the Province of Ontario
of the OPP’s policing services to the Appellant constituted an exempt supply
pursuant to section 21 of the Exempting Schedule.
V. Disposition
of Appeals
[80]
For the foregoing reasons, the appeals are
allowed with costs. The reassessments are referred back to the Minister for
reconsideration and reassessment on the basis that the supply by the Province
of Ontario of the OPP’s policing services constituted an exempt supply for the purposes
of the GST Act.
[81]
The parties have thirty days from the date of
this judgment to make submissions with respect to the amount of costs that the
Court should award to the Appellant. Such representations shall not exceed 10
pages. If no submissions are received, costs shall be awarded to the Appellant
as set out in the Tariff.
Signed at
Antigonish, Nova Scotia, this 27th day of September 2016.
“S. D’Arcy”
APPENDIX A
Court File Nos.:
2013-4844(GST)G
2013-4845(GST)G
20I3-4846(GST)G
TAX COURT OF CANADA
BETWEEN:
407 ETR CONCESSION
COMPANY LIMITED
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
STATEMENT OF PARTIAL AGREED FACTS AND DOCUMENTS
The parties agree to the following statement
of facts, without
prejudice to the right
to call evidence which does not contradict the facts below. The parties
also agree that the documents included as exhibits in this binder are the documents
that will be offered by one or the other party
at the trial. The documents
in category “A” are fully admissible
without further identification and the documents
in category “B” are admissible
if there is no objection to relevance and the Court accepts that the documents
have been satisfactorily identified
by a witness.
Agreed Facts
1.
The Province
of Ontario established the Ontario Transportation Capital Corporation ("OTCC") as a Crown Agency to oversee the design, construction, operation, maintenance and management of Highway 407.
2.
OTCC's operation of Highway 407 was
pursuant to the legislative authority granted to it under
the Capital Investment Plan Act, 1993 and its regulations.
3.
Actual construction of Highway 407 commenced in 1994.
4.
Highway 407 opened initially
under the management of the OTCC on June 7,
1997.
5.
At that time the lands and highway comprising
Highway 407 were designated as part of the King's Highway.
6.
At that time,
Highway 407 was owned by the Crown in Right of Ontario and was
under the jurisdiction and control
of the Province of Ontario's Minister of Transportation for the purposes
of the Public Transportation and Highway
Improvement Act (section 2(1)). The Minister of Transportation was also the Minister responsible for the administration of the Capital Investment Plan Act, 1993 (section 3(2)) in respect of the OTCC.
7.
The Province
operated Highway 407 as a toll highway,
first through OTCC and
then 407 ETR Concession Company Limited, from October 14, 1997
to May 5, 1999.
8.
For illustrative purposes, a map of Highway
407 ETR is found at Tab 1 of the Agreed Documents and a map showing
regional municipalities in the GTA is found at Tab 2.
9.
Until the time that 407 ETR Concession Company Limited became owner of the
Highway 407 Lands as defined in the Highway 407 Act, 1998 as
the tenant under a
ground lease and entered into the CGLA with Ontario, the OPP was responsible for providing the traffic patrol on Highway 407.
10. OTCC was continued as a corporation with share capital
as 407 ETR Concession Company Limited by Articles of Continuance dated April 6, 1999.
11. Also on April 6, 1999, 407 ETR Concession Company Limited entered into the Concession and Ground Lease Agreement
("CGLA"), a 99 year
concession agreement,
with the Province.
The CGLA, with amendments and selected schedules are found at Tabs 3-10 of the
Agreed Documents. In particular, The Police Services Agreement and an amendment
to it, which form part of the CGLA are found at Tabs 7 and 10.
12.
The CGLA was an agreement
between The Crown in Right of Ontario,
as Represented by the Minister
without Portfolio with Responsibility for Privatization and 407 ETR Concession Company Limited.
13.
The shares of 407 ETR Concession Company
Limited were acquired
by 407 International Inc., a consortium of non-public corporations, from the Province
under a share purchase
agreement dated April 12, 1999 with a closing date of
May 5, 1999.
14.
Highway 407 is an all-electronic open-access highway. 407 ETR Concession Company Limited is the "owner" of the highway
as that term is defined
in s. 1(1) of the Highway 407 Act, 1998.
15.
Section 12 of the Highway 407 Act, 1998 was proclaimed in force on May 5, 1999.
Subsection 12(l) designates the highway as a private
toll highway that is a controlled-access highway. Subsection 12(2) provides that despite any designation under section
36 of the Public Transportation and Highway Improvement Act, Highway 407 is not part of the King's Highway.
16.
Sections 36, 55, 56, 57 and 59 of the
Highway 407 Act, 1998 deem
Highway 407 to be
part of the King's Highway for the purposes of those sections.
17.
407 ETR Concession Company Limited is not a municipality.
18.
Highway 407 is not under the jurisdiction or control of any municipality.
19.
Highway 407 is not part of
the road system of any municipality.
20.
Highway 407 runs through and is situated in the Regional
Municipalities of Halton, Peel, York and Durham.
21.
407 ETR Concession Company
Limited does not pay realty
tax on the longitudinal highway lands that are the "Highway 407 Lands". It does pay realty tax on its
"Operations Centre Lands" and its "Patrol Yards Lands" as those terms are defined
in the CGLA.
22.
In the relevant period between January 1, 2007 and December
31, 2011, 407 ETR
Concession Company Limited
did not use, receive or was provided
with police services, assistance or response on Highway
407 from any of:
a.
the Halton Regional
Police Service,
b.
the Peel Regional
Police,
c.
the York Regional
Police,
d.
the Durham Regional Police,
e.
the Toronto Police Service; or
f.
any other municipal
police service.
23.
In the period between January 1, 2007 and December 31, 2011, no municipal
police service provided a traffic patrol on Highway 407.
24.
Highway 407 is
a fenced-in corridor with fencing which restricts
access to the highway.
25.
The highway
fence defines the area of responsibility of the Highway 407
Detachment of the Ontario Provincial Police ("OPP").
26.
"Corridor Lands" and "Highway 407 Lands" are defined terms of the CGLA.
"Corridor Lands" means lands
and rights that are (i) adjacent to, over or under the Highway 407 Lands, (ii) owned by the Province
and (iii) not leased to 407 ETR Concession Company Limited. The Province of Ontario retains
the fee simple title
in both.
27.
The OPP is the provincial police force for the Province
of Ontario.
28.
The OPP provides policing
service to 407 ETR Concession Company Limited on Highway 407 Lands, but this does not include the Corridor
Lands. The policing service on Highway 407 is provided
by the Highway 407 Detachment of the OPP which
provides full policing
service on Highway
407 to ensure that public
and contractual needs are met.
29.
None of the police services provided
by the OPP to 407 ETR Concession Company Limited are provided
pursuant to sections 4, 5 or 10 of the Police
Services Act.
30.
During the relevant period the Highway 407 Detachment
of the OPP was described by the OPP as one of the eight OPP regional traffic
detachments in the Greater Toronto Region and was part of the OPP's Highway
Safety Division.
31.
Subsection 59(4) of The
Highway 407 Act, 1998 provides that the Solicitor General (now the Minister
of Community Safety
and Correctional Services)
may enter into an agreement with the owner for the provision of services under paragraph 3 of subsection
19(1) of the Police Services
Act.
32.
Article 14.1(1) of the CGLA requires
407 ETR Concession Company
Limited to "permit the OPP to maintain traffic
patrol and provide
other services which the OPP is required
to perform pursuant
to Laws and Regulations in respect of Highway 407".
33.
Schedule 15 of the CGLA is the Police Services Agreement between Her Majesty the Queen in Right of Ontario as represented by the Minister
of Community Safety and Correctional Services
and 407 ETR Concession Company
Limited. The version of Schedule 15 for the term commencing October 1, 2005 and
expiring on September 30, 2010 found at TAB 7 of the Agreed Documents includes as Schedule “B” the “O.P.P. Cost Schedule
for Municipal Policing
for the year 2005”. The
version of Schedule 15 for the period
October 1 , 2010 to December 31, 200l [sic] found at TAB 10 includes as Schedule “B” the “O.P.P. Cost Schedule
for Municipal Policing
for the year 2012 (Based on 2010 Costing
Formula”.
A. Documents agreed
to be fully admissible without
further identification
34.
For illustrative purposes a map of Highway
407 at TAB 1 and a map of Regional Municipality Boundaries
at TAB 2.
35.
The Highway
407 Concession and Ground Lease Agreement (CGLA) between
the Crown in Right of Ontario, as represented by the Minister
Without Portfolio With
Responsibility for Privatization and 407 ETR Concession Company
Limited made as of the 6th day of April 1999 at TAB 3.
36.
The following Schedules
from the CGLA:
a.
Schedule 1, Affected Highway
Protocol, at TAB
4;
b.
Schedule 3, Corridor
Management Protocol, at TAB 5;
c.
Schedule 13, Ministry of Transportation Enforcement Services
at TAB 6;
d.
Schedule 15, Police Services
Agreement, for the term commencing October 1, 2005 and expiring
on September 30, 2010 at TAB
7; except, for avoidance of doubt, the parties to this
litigation disagree on the
meaning and significance of the inclusion
of the OPP's "Cost Schedule for Municipal Policing" which is found at Schedule
"B" to Schedule
15.
37.
The following amendments
to the CGLA:
a.
Amendment to the CGLA made as of March 6, 2008 at TAB 8;
b.
Amending Agreement
to Schedule 13 of the CGLA effective
April 1, 2009 at TAB
9;
c.
Amending Agreement to Schedule 15, The Police Services Agreement between The Minister
of Community Safety and Correctional Services and 407 ETR Concession Company Limited effective from the 1st day of October,
2010 to the 31st day of December, 2011 at TAB 10.
B. Documents which may be admissible, if relevant and if identified by a witness
38.
Invoices from Ontario's Ministry
of Community and Social Services
- OPP to 407 ETR Operations Centre for the period
January 15, 2007 to April 13, 2012 at
TAB l1.
39. A letter dated July 7, 2010 from Andrew Earmer,
Bureau Commander, OPP Business and Financial Services
Bureau, to Ken Walker, Chief Financial Officer, 407 ETR Concession Company Ltd. regarding
"Revised 2010 Policing
Costs - Implementation of New Harmonized Sales Tax" at TAB 12.
40.
The following OPP Highway 407 Detachment Business
Plans:
a.
2008 Business Plan at TAB 13;
b.
2009 Business Plan at TAB 14;
c.
2010 Business Plan at TAB 15;
d.
2011 Business Plan at TAB 16;
41. The following OPP Annual Reports:
a.
2008 Annual Report at TAB 17;
b.
2009 Annual Report at TAB 18;
c.
2010 Annual Report
at TAB 19;
42.
The following OPP Presentations:
a.
OPP Municipal Policing Framework at TAB
20;
b.
"Dedicated
Policing for an Open Road Electronic Highway" at TAB 21;
c.
The Municipality of Port Hope Contract Policing
Proposal dated May, 2012
at TAB 22;
d.
OPP Municipal Policing
Billing Review, March 2014 at TAB
23.
43.
Sample news clip regarding
criminal investigation work performed
by the OPP Highway 407 Detachment on Highway 407 at TAB 24.
44.
Statistics Canada, Police Resources in Canada, 2011, excerpted at TAB 25.
. . .
Email this Content